Mortgage rates fell last week but remained in the high-6% range.
Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.79%, down from the week prior’s 6.87%. A year ago at this time, the 30-year FRM averaged 6.32%.
The 15-year fixed rate also dropped from 6.21% to 6.11%. A year ago, it averaged 5.56%.
“Mortgage rates moved slightly lower this week, providing a bit more room in the budgets of some prospective homebuyers,” said Sam Khater, Freddie Mac’s Chief Economist.
“We also are seeing encouraging data on existing home sales, which reflects improving inventory. Regardless, rates remain elevated near 7% as markets watch for signs of cooling inflation, hoping that rates will come down further.”
Both existing and pending home sales saw positive data in February as listings jumped. High home prices are encouraging some sellers to list despite the high rate environment, hoping to make enough from a sale to offset the increased cost of buying a new house.
Pricey new construction sales dipped in response. However, more inventory also encourages buyers to step out of the shadows, ensuring that competition will remain elevated with home prices on the rise.
Rates, however, are on a different path, propped up by rising Treasury yields. Wall Street analysts have expressed surprise over the strength of yields since the beginning of the year, considering that the Central Bank is expected to make cuts in 2024. But inflation, which influences yields, has stuck around despite the Fed’s aggressive battle to bring it down.
The personal consumption expenditures price index, excluding food and energy, rose 2.8% YOY and was up 0.3% last month, in line with analysts’ expectations. The Fed considers this a key inflation indicator.
“Nothing really super surprising,” Victoria Greene, chief investment officer at G Squared Private Wealth, told CNBC. “I think everybody is going to pivot to [next week’s labor data] pretty quickly and say well maybe if we see some weakness and cracks over here, this little stickiness in inflation and PCE isn’t going to matter as much.”
The Federal Reserve is expected to hold rates steady at its May meeting and begin cuts in June.
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